Aircraft Firms Find Agreement On Payments

By Carole ShifrinBy Carole ShifrinAugust 19, 1978

The Federal Trade Commission yesterday announced tentative acceptance of consent orders with the nation's three major aircraft manufacturers barring them from making foreign payments to obtain sales contracts at the expense of other American firms.

As previously reported, the orders were signed by The Boeing Co., Lockheed Corp., and McDonnell Douglas Corp.

If finally adopted by the FTC after a public comment period, the orders would settle proposed agency complaints charging the firms with making illegal payments abroad to procure aircraft sales. The payments constituted unlawful "unfair methods of competition" by effectively denying other American companies the opportunity to compete for the sales, the FTC alleged.

The consent agreements bar the firms and their agents or representatives from making the illegal payments to officials or employees of foreign governments or private companies in pursuit of sales from foreign customers when competing with other American companies. The agreements are more restrictive than the Foreign Corrupt practices Act of 1977 which bars bribes to foreign government officials only.

In the FTC orders, "payments" do not include "normal" business expenditures for entertainment, travel or "small" gifts which don't exceed $1,000 per gift.

In agreeing to the settlements, the companies do not admit that they violated the law. All three companies in the past have publicly disclosed making "questionable" payments overseas to help sell airplanes: Lockheed has admitted making as much as $38 million, and Boeing $52 million, in overseas bribes, payoffs and kickbacks. McDonnell Douglas, which disclosed making under $3 million in questionable payments overseas, said several months ago that it is among the corporations under investigation by a federal task force for allegedly trying to promote foreign sales through bribery.

The three FTC draft complaints do not reveal names and dates but allege that the firms made payments intended to gain favor with potential foreign customers between 1970 and 1975.

Under the FTC orders, the companies would be liable for penalties of up to $10,000 a day per violation should they fail to live up to the agreements.